An initial public offering by Opal Kani Pars Mineral Processing Company was not received well by investors on Wednesday as the number of retail participants declined by almost half.
Unlike most previous IPOs held in the fiscal year that ends in March, barely 2.7 million investors took part in the IPO.
Given the unusually high number of trading codes issued in the past few months compared to other IPOs, Wednesday's share offering was seen as a failure by many observers and a threat to the inflow of liquidity into the struggling market.
It also seemed to be a natural response by millions of retail investors flooding Iran's stock market in recent months to a prolonged bearish trend.
IPOs offered high returns amid the frenzy of buyers competing for profits in listed companies. But with stock market indicators beginning to plummet since August, share prices of many companies plunged below the prices set via the IPOs, harming the trust of millions of investors demonstrated in the huge decline in new IPO's.
Fearing investor aversion, the Opal IPO was cancelled once in December. However, the company sold 7% of its stake on Wednesday comprising 1.4 billion shares via the Tehran Stock Exchange, according to a press release posted on the TSE website.
With each share tagged at 12,420 rials, the company generated 17.38 trillion rials ($30 million) via the disparate IPO.
Price discovery was through book-building -- a process by which an underwriter attempts to determine the price at which an IPO is to be offered. Price discovery involves recording investor demand for shares before arriving at the issue price.
Operating in the key mining sector, Opal Kani Pars Mineral Processing Company is a private enterprise founded in 2006 in Tehran. It has five subsidiaries and associated companies.
After making historic 300% gains in the first four months of current fiscal year, the main index of TSE, TEDPIX, went into a deep correction phase that has continued as the Iranian yearend approaches. It shed 900,000 points and lost more the 42% of its value in the bear market.
Investor turnout in IPOs reached its apex in September when 5.5 million partook in the offer made by Gostar Pars Energy Company. After that the number of investors declined reaching 4.2 million in the offer by Sepidar System Company, a software company. The downward spiral continued and fell to 3.7 investors when Tabas Parvardeh Coal Company went public last month.
